Real Good Food vows to shake up financial reporting

Haydens and Renshaw owner Real Good Food has said it is committed to improving its corporate governance and reporting after failing to fully report details of payments made to directors.

Payments had been made to two directors for consultancy services that were not properly disclosed in transaction notes for the company’s accounts in 2014 to 2016. The costs had been accounted for by the business, however.

Real Good Food (RGF) today said its standards of corporate governance and reporting had been below those investors "might reasonably expect", adding it was “committed to rectifying this important aspect of operations and disclosure”.

At the end of last month, RGF reduced its earnings expectations for the financial year ended 31 March 2017 to £1m. This was half the figure suggested by the business earlier this month, which was itself around £3m lower than previously forecast (see full details here).

The RGF board said it would be appointing external advisers to conduct a full review of the company's corporate governance and financial reporting procedures, and would make a further announcement when the review had been completed and “any necessary changes implemented”.

“In light of the recent discovery that transactions for these separately remunerated activities had not been appropriately declared as related party transactions in the company’s annual report and accounts as regulation required, the board carried out an exercise to establish precisely what payments had been made to which related parties,” announced Real Good Food (RGF) today.

The accounts probe was conducted with the forensic accounting department of BDO LLP.

Undisclosed payments made to RGF founder and executive chairman Pieter Totté in the financial years 2014, 2015 and 2016 totalled £1.9m and, said RGF, included consultancy agreements for services relating to merger and acquisition and other project work that was beyond his day-to-day role as executive chairman. The total includes £1.1m in relation to the disposal of the Napier Brown Sugar business in 2016.

Undisclosed payments totalling £96,000 had been made to non-exec director Peter Salter, who was chairman of the firm’s audit and remuneration committees. Salter resigned the role and stepped down from the board on 1 August.

Totté stepped down a week later, the same day chief financial officer David Newman left the business. Newman has been replaced by Harveen Rai, previously chief financial officer at Arzyta UK Holdings.